The Pound to Euro (GBP/EUR) exchange rate has made a recovery from earlier losses on 20th April, rising to the region of €1.1429 in the afternoon.
This reversal of performance has been caused by another speech from a Bank of England (BoE) official; this time Michael Saunders has influenced Sterling.
In practical opposition to Governor Mark Carney’s earlier comments, Mr Saunders has spoken supportively of raising UK interest rates.
While Mr Saunders has warned against explicit forward guidance, the trader assumption is that a May interest rate hike is back on the table.
(First published 20th April, 2018)
Dovish Announcement from BoE Governor Prompts Pound to Euro (GBP/EUR) Exchange Rate Decline
This puts the GBP/EUR exchange rate at the worst level of the week, with Sterling trading at a low of €1.1387 compared to the week’s earlier high of €1.1598.
Mr Carney has panicked Pound traders by suggesting that a UK interest rate hike in May might not occur, as well as implying a slow pace of rate hikes in the future.
Emphasising how Brexit is still a highly limiting factor on BoE plans to adjust interest rates, Mr Carney said;
‘Prepare for a few interest rate rises over the next few years. I don’t want to get too focused on the precise timing, it is more about the general path.
‘The biggest set of economic decisions over the course of the next few years are going to be taken in the Brexit negotiations and whatever deal we end up with’.
Euro to Pound Exchange Rate (EUR/GBP) Steady as EU Leaders Discuss Eurozone Reform
There has been limited high-impact economic news out of the Eurozone today, but the single currency has still managed to appreciate in the EUR/GBP exchange rate.
The most notable event of late has been a meeting between French President Emmanuel Macron and German Chancellor Angela Merkel.
Both have discussed the possibility of tighter Eurozone economic integration in the future, via measures such as the creation of a common budget.
Observers are unsure about if the leaders will reach an agreement on the costly plans, but for the time being there is underlying optimism about a deal being struck.
Pound to Euro Exchange Rate Forecast: Are GBP/EUR Gains ahead on UK GDP Growth?
The Pound (GBP) seems set to close weekly trading in low demand against the Euro (EUR), but could make a recovery in the week ahead.
The main UK economic data on the week starting 23rd April will come on 27th April, consisting of a consumer confidence score and Q1 GDP growth rate estimates.
Although the GfK consumer confidence reading is tipped to show a decline from -7 points to -8, a rise for the GDP estimates could boost demand for Sterling.
Some economists are forecasting higher annual GDP growth from 1.4% to 1.5%. While a minor improvement, such a result could still boost Pound exchange rates.
For Euro traders, the next economic data to watch out for will consist of a consumer confidence estimate for April, out this afternoon.
The flash figure is tipped to decline from 0.1 points to -0.2, which could trigger a Euro to Pound (EUR/GBP) exchange rate decline before the end of weekly trading.
Further ahead, there could be additional Euro losses on 23rd April if the Eurozone PMI activity readings reveal slowing manufacturing and services sector output.
As such, despite the recent negativity an early Pound to Euro (GBP/EUR) exchange rate rise is not out of the question next week.